Hi,
#1 - Xmms is getting a bit old now. It's very popular still, it's also like Winamp, so it's liked for that. I use Amarok with KDE because it's the best media player I know. Faaaar better than itunes, windowsmedia etc.
XMMS still has a lot going for it though, because it has tons of plugins.
Now, to answer questions 2, 3, 4 and 5 I'd prefer to go back to basics with you.
I need the answer to just one question: Which Linux distribution are you using?
The reason I ask, is that you are doing installation the HARD way! - most installation of software is automatic in Linux these days. My website details how to install software for most distributions, and it's as simple as selecting the software you want to install, clicking install and the software is downloaded from the net and installed automatically.
See my website
http://www.linuxnewbieguide.org specifically, the chapter 'How do I install software?', which is
HERE..
This is the case for most modern Linux distros, and is especially easy on Ubuntu/Debian based distros.
I know that I have mp4 compatability in my version of XMMS, and I have never once unzipped a file, or had to compile anything in order to get it to work!
Go read my link and hopefully you won't even need your next questions answered.
But if you do - I'm happy to help - let me know how you get on.
Regards,
Ali